[Via Satellite 02-20-2015] Last year DirecTV’s Latin American subscriber base crested 19 million, growing to nearly match the number of subscribers in the United States. The company added 903,000 net new subscribers in Latin America during its 2014 fourth quarter, coming close to the stated goal of 1 million. On a conference call Feb. 19, Michael White, president and CEO of DirecTV, said the company had a solid year despite facing extreme macroeconomic challenges, namely runaway inflation in several countries.
To deal with depreciating currencies, DirecTV has been seeking to keep pace with rates of inflation while pricing locally in order to maintain a solid Average Revenue Per User (ARPU). Bruce Churchill, president and EVP of DirecTV Latin America, said this can be challenging in markets with explicit or quasi-explicit price controls.
“To give you a sense of the size of the currency depreciation in the year-over-year comparison, the Argentine Peso depreciated 40 percent, and the Colombian and Chilean currencies about 15 percent each, versus the fourth quarter of last year,” said Churchill during the conference call.
Of DirecTV’s top Latin American markets, Venezuela, has suffered the worst inflation. The Central Bank of Venezuela reported 63.3 percent annualized inflation by November 2014. For DirecTV, the country represented slightly more than 25 percent of revenues from Pan-Americana (which excludes Brazil) and 45 percent of Operating Income, before Depreciation, Amortization, Tax and Interest (OIBDA). DirecTV’s Venezuela business saw a 35 percent increase in local currency revenues during the fourth quarter of 2014, driven by a combination of a 10 percent increase in average subscribers, and an aggressive approach to price increases. Still, Churchill said pricing remains challenging to match with inflation.
“Assuming 30 percent, 20 percent and 10 percent currency depreciation in Argentina, Colombia and Chile respectively, U.S. dollar revenue, ex-Venezuela, will grow at low single digits,” said Churchill.
DirecTV continues to invest heavily in Latin America, seeing strong potential there both now and in the long term. Last year in October the company launched the DirecTV 14 satellite and in December orbited the DLA 1 payload on the Intelsat 30 satellite. DirecTV 14 provides backup capacity for HD programming in the U.S., along with room for 4K Ultra-HD services. The DLA 1 payload, which White said is now entering service, provides Ku-band capacity over Latin America. Later this year DirecTV will launch another Ku-band payload, DLA 2, aboard Intelsat 31. The company also initiated an Over-the-Top (OTT) offering in Spanish named Ya Veo last year, with more than 3,000 hours of Video-on-Demand (VOD) content.
White anticipates less subscriber growth in Pan-America this year due to the absence of major sporting events like the World Cup. The 2016 Olympics in Rio de Janeiro is the next big global sports event to take place in Latin America.
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